US indices up
Things are looking up again on Wall Street
October 16, 2023, 11:16 p.m
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The stockbrokers in New York are also looking to the Middle East. Is the war in Gaza turning into a conflagration? Since it doesn’t look like it at the moment, they take some courage. But that is not the only reason for rising prices.
At the start of the new week, the US stock markets counteracted the recent losses. Traders spoke of an increased appetite for risk across markets following the flight to supposed safety in the wake of the Middle East war. The Dow Jones Index recovered by 0.9 percent to 33,985 points, S&P 500 and Nasdaq Composite increased by 1.1 and 1.2 percent respectively. According to initial information, there were 2,156 (Friday: 1,079) price winners and 752 (1,809) losers on the Nyse. An unchanged 65 (69) titles went off the market. At the same time, prices for crude oil and gold fell slightly, and the dollar and US bonds also tended to weaken.
What was viewed positively on the stock market was that there had been little sign of an imminent Israeli invasion of the Gaza Strip. However, such a situation is still likely, it was said. Others pointed out that the region hardly plays a role in the global economy. Only an expansion of the Middle East war could have a serious impact on growth, it said. “Are geopolitical issues becoming the dominant market theme? Until Friday, the Middle East was a theme with limited market impact,” noted Capitol Securities chief economic strategist Kent Engelke.
Safe havens are avoided
The only economic data released was the Empire State Manufacturing Index. It wasn’t quite as bad in October as economists had feared. Nevertheless, it deteriorated on a monthly basis. On the bond market, the increased risk appetite caused prices to come back after the flight to supposed security had recently caused them to rise. Yields therefore recovered. The Empire State Index, which turned out better than feared, also boosted returns slightly, as it provided few arguments for interest rate cuts.
The Dollar index lost 0.4 percent due to the more courageous investors. Investors no longer see much appreciation potential for the greenback, Unicredit said. The market is skeptical about a possible interest rate hike by the US Federal Reserve in December, analysts said. Meanwhile, rising bond yields depressed the price of gold.
As well on Oil market prices came back somewhat after the recent strong increase. Fears that the war between Israel and Hamas would spread to other countries in the region such as Iran and a resulting shortage of supply had recently driven oil prices sharply upwards. However, it was considered unlikely that Iran would enter the war directly. Prices were also weighed down by reports of a possible easing of US sanctions against Venezuela. The government and opposition there want to resume talks that have been on hold for almost a year. If sanctions are eased, Venezuelan oil could increasingly come onto the markets.
Profit warning leaves Pfizer cold – Biontech slumps
Pfizer were unimpressed by the pharmaceutical company’s profit warning and gained 3.6 percent. Among other things, the company has to write down stocks of the Comirnaty corona vaccine because demand was lower than expected. Analyst Daina Graybosch from Leerink Partners nevertheless expected a sharp increase in demand for Comirnaty and the drug Paxlovid for the treatment of Covid-19 diseases.
The course of the Mainz vaccine partner Biontech On the other hand, fell by 6.4 percent; the company will likely have to take depreciation up to the same amount as Pfizer. To this end, HSBC downgraded the share and lowered its price target.
Despite the still uncertain vaccination behavior of the US population in the coming winter Moderna (-6.5%) is sticking to its sales forecast for its own Covid-19 vaccine published at the beginning of August. However, the share price was weighed down by share sales by co-founder and chairman Noubar Afeyan.
Linkedinthat too Microsoft social media platform for working people, which belongs to the company, is cutting around 670 jobs. The mother’s price gained 1.5 percent. The Albemarle share (+2.7%) reacted positively to the lithium company withdrawing its $4.16 billion offer for the Australian Liontown.
Lululemon (+10.3%) benefited from the upcoming inclusion in the S&P 500. They replace the shares there Activision Blizzardwhich are leaving the index as a result of the takeover by Microsoft. Vista Outdoor fell by 23.7 percent. The company presented disappointing quarterly figures and gave a pessimistic outlook. Vista also announced the sale of its sporting goods business to the Czechoslovak Group of the Czech Republic for $1.9 billion. The separation from the division is part of the planned split into two companies.